This week, two executives and a Mexican sales agent from Lindsey Manufacturing, a utilities restoration manufacturer, were convicted by a federal jury in Los Angeles for bribing Mexican officials at a state-owned utility through sales agents from 2002 to 2009 as the company sought business from the utility. The implications of this conviction are very broad, including the interpretation of how to define a "foriegn official."

"Today's guilty verdicts are an important milestone in our FCPA enforcement efforts," said Assistant Attorney General Breuer. "Lindsey Manufacturing is the first company to be tried and convicted on FCPA violations, but it will not be the last. Foreign corruption undermines the rule of law, stifling competition and the health of international markets and American businesses. As this prosecution shows, we are fiercely committed to bringing to justice all the players in these bribery schemes "the executives who conceive of the criminal plans, the people they use to pay the bribes, and the companies that knowingly allow these schemes to flourish. Bribery has real consequences."

There will likely be an appeal to the Ninth Circuit Court of Appeals. SNR Denton has been following the developments of the Lindsey trial and has become familiar with the facts, testimony, and points of contention. We had the opportunity to observe Opening Statements, testimony, and Closing Arguments. What follows are our observations on the events, result, and dynamics that occurred and will likely come.

  • Jury trials in Foreign Corrupt Practices Act (FCPA) cases will increase for several reasons: (1) FCPA enforcement is a continuing priority for the US Department of Justice (DOJ); (2) the cases against individuals are increasing dramatically with close to 50 individual criminal defendants charged in the last several years versus far fewer than that combined in the 30 years before; (3) these individual criminal defendants will fight when they have no other choice than to go to prison (simply put, freedom rather than just financial penalty makes the stakes that much greater and more worth fighting for); and (4) when prosecutors are successful at trial on cases in the absence of overwhelming proof, as was the case in Lindsey, it validates their efforts and the risks they take when filing such cases, and will likely embolden them to file even more aggressive cases.
  • Courts, prosecutors, and defense counsel will continue to struggle with the vague, undefined definitional parameters of the FCPA. Currently, the center of the storm in upcoming defense motions in the case against Control Components, Inc. (CCI) in U.S. District Court in Los Angeles is the meaning of "foreign official". In Lindsey one fight was over the meaning of government "instrumentality", which the defense lost.
  • The more cases that go to trial, the more appellate case law will be generated—case law that will provide clarity for future investigations and prosecutions , and most importantly for companies and individuals seeking to install compliance plans that will insure legal behavior.
  • The Lindsey case was held in downtown Los Angeles, from where the working class jury was drawn. The jury seemed to have little, if any, sympathy for multi million dollar companies or individuals who appeared to spend millions of dollars bribing foreign officials. This socio-economic dynamic, which will be repeated in the CCI case, will need to be aggressively addressed in planning and executing a trial defense.
  • Though the lead FBI agent was caught in several inconsistencies between her grand jury and trial testimony,  her credibility in the jury's eyes did not appear to suffer.
  • Discovery mistakes, or outright violations, may continue to plague future DOJ prosecutions as it did here in Lindsey. Critical evidence was suppressed for discovery violations, though ultimately it did not affect the outcome. Discovery issues need to be aggressively litigated by defense counsel all through the case and during the trial.

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